‘Wall Street,’ the movie, frightens Main Street

Commentary: Keep telling yourself, ‘It’s only a movie’

BOSTON (MarketWatch) — Tim, from Weymouth, Mass., got up as the credits started to roll on “Wall Street: Money Never Sleeps,” turned to his fiancé Nikki and said “And that’s why I’m not investing in the stock market. The whole thing is fixed. Somebody is going to make money, but it’s not going to be you and me.”

Ouch.

Oliver Stone on 'Wall Street' Sequel

(11:50)

Director Oliver Stone talks with columnist David Weidner about why he made "Wall Street: Money Never Sleeps," revisiting the subject and the characters after 23 years, and assesses the appeal of antiheroes like Gordon Gekko.

Tim’s far from alone. I didn’t have to go to the movies to find a lot of people who have soured on the idea of putting their money to work in the market. You can find message boards and investor groups teeming with the message that the “market is fixed … and against you.”

But I did see the film and spoke with members of the audience. And while they seemed to agree with the message of the movie, they were having trouble finding real solutions to achieve their financial goals. They wondered how anyone who has witnessed the greed and corruption on Wall Street could feel comfortable putting money there.

A matter of trust

Ironically, the movie laid out the problem with a line that was almost a throwaway: “The mother of all evil is speculation.”

Clearly, in the time since the original “Wall Street” movie, when the fictitious Gordon Gekko gave his iconic “Greed is good” speech, new products and ideas have swept not only Wall Street but Main Street. Today, individual investors scorn buy-and-hold strategies and are just a mouse-click away from trading leveraged exchange-traded funds. Read related story on Gordon Gekko’s real-life transgressions.

Jay, a 40ish executive-search manager from Hingham, Mass., told me after watching “Wall Street: Money Never Sleeps” that his problem with investing is that he doesn’t know “what to trust.”

That was an interesting perspective. For most people, the issue has been not what to trust, but who. Jay explained that mediocre fund managers and bad guys like Bernie Madoff have made it so that he doesn’t necessarily believe in the people handling myriad investment products.

Said Jay: “What you saw in the movie — but I believe this is real — is a whole lot of people who are making money pushing paper around, but not really doing anything productive. I’m trying to figure out what I believe in, what I can trust to be a good investment.”

How investors like Jay and Tim define “what to trust” will undoubtedly determine how they act. They are not about to give in to “the mother of all evil” and become speculators, but they’re not willing to blindly follow “conventional wisdom” either.

They’re making the same kind of decisions that most investors are these days, as they figure out what’s next for their own portfolios.

Active role

Doing nothing and staying out of the market just doesn’t work for most people. Despite Tim’s tough talk, when I pushed him for his investment portfolio, it wasn’t all money markets. There were a few plain vanilla mutual funds in his retirement plan, and some stocks. His fiancé has been saving through a target-date fund that is the default choice in the retirement plan at her job.

When he gets “more comfortable with the market,” Tim said he’ll invest more; until then, he is paying off debt, saving for a down payment on a home and “investing in myself.” Consider it a personal bailout, paying off his past excesses; there’s “moral hazard” there too, in that plenty of consumers have paid down debt only to ramp it up the next time they feel good or need a big-ticket item.

The real question is what can investors trust now that they’re jaded by the market’s excesses? It’s impossible to get comfortable with the market if you believe that the system is rigged.

So Tim and Jay and several others who attended the movie this week and agreed to talk with me afterwards started brainstorming about what it would take for them to be back at the market full strength. It wasn’t the recent rally or the performance numbers, it was old-fashioned, common-sense strategy.

These investors said they could be comfortable buying stock in companies that “produce something valuable or real” or that “have intrinsic value.” Sure, a real estate company that owns timberland, for example, can be played and gamed like any other, but the underlying value of the property creates a floor for the stock price. Shares are not likely to stay below the price of the underlying assets for long, as those assets are tangible and not just paper that’s being passed around.

“Wall Street: Money Never Sleeps” didn’t talk about investing in solid companies that offer good fundamentals, reasonable dividends to reward the owners, strong demand for the products and a reasonable expectation that sales will hold up in any market conditions. The film’s audience did.

If the movie generates buzz about how the market is bad for the average guy, then it fails to tell the true story. If it serves as a reminder that Main Street investors should leave the rampant speculation and insanity to the pros, then it holds a real lesson in teaching investors how to get comfortable in these turbulent times.

Greed is good, and so is fear. Investors who keep both in moderation — and have a strategy that doesn’t give in to either of those two extremes — will find out that while their money never sleeps, it doesn’t have to beat everyone else to win the game.

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